Tax day is quickly approaching but it’s not too late to take advantage of several tax deductions for your small business. Here are 5 deductions that should not be overlooked when completing your 2009 tax returns this year.
These deductions can help you cut your tax bill, but be sure you fully understand the proper method for utilizing each deduction as it relates to your business.
1. Automobile expense – you can deduct mileage, parking and toll expenses incurred when using your vehicle for business purposes. You need to keep accurate records of your mileage, including your odometer start and ending miles for each eligible trip. You can take advantage of either the standard mileage rate or actual expenses. You may also be eligible to receive money from the government if you purchased a hybrid vehicle for your business.
2. Equipment and furniture expenses – you may need to decide if it’s better for you to track these as an expense or if it’s better to depreciate your new equipment purchases. New IRS codes allow you to depreciate up to 50% of qualifying property during the 1st year, up to $250,000 of new equipment costs.
3. Education cost – yes, you can deduct training and education costs that are directly related to your current job or position. This may include continuing education or certification costs. Just remember, this does not apply to training taken to secure a new job or position.
4. Interest on loans – interest on credit used to finance your business should be fully deductible. You may also be eligible to consider interest paid on personal loans if the portion of the loan was used to finance your business.
5. Professional and legal expenses – these expenses are generally deductible but may need to be amortized if they are considered start-up expenses. The costs of professional associations are also legitimate deductions.
There are many more possible deductions available to you, depending on the nature of your business so be sure to work with a tax professional to answer your questions before submitting your returns. Preparation through good record keeping will help not only reduce your taxes, but your frustration level as well.